KEY FINDINGS- COMMERCIAL VEHICLE SCR MARKET

1. In US, as of 2020 after SCR was mandated in 2011, ~43% of the present Class 3-8 diesel vehicles (~11 million commercial vehicles) now have SCR as a standard fitment. In India, the total number of commercial vehicles sold were 52,130 units in July 2021 and almost all M&HCVs sold now have SCR as standard.
2. Unlike early 2010s, when most of the commercial vehicle SCR market was comprised of OE segment, now there is a substantial demand from aftermarket/replacement segment.In past two years, companies like Shell,ENOC,FMT Swiss AG, GP Petroleum have launched their own Diesel exhaust fluids to cater to this segment
3. China is now the biggest OE SCR market as almost 3 Million commercial vehicles with Diesel engines are sold every year. After implementation of China VI emission standard on all vehicles by July 2021. It will be 2X bigger than second and third biggest commercial vehicle SCR market i.e US and Europe
4. The United States has implemented strict rules from March 2020  that diesel engines are required to meet certain NOx emission standards such as 40.4 mpg and 202 g/mile of CO2. As the CO2 emission standards have been increased by 1.5% year-on-year to comply with the CAFE (Corporate Average Fuel Economy) regulations

INTRODUCTION

Commercial vehicles makeup for only about 10-12% of global new vehicle sales and fleet but are responsible for ~60% share of total vehicular emissions. The high emission share is partly because of their higher engine capacity, higher running time as compared to private vehicles and more than 70% of them being powered by Diesel.

Selective Catalytic Reduction (SCR) is a mandatory NOx reduction technology fitted on >90% of heavy commercial vehicles after arrival of Euro 4 in Europe (since Mid-2000s), Tier IV in US (since 2010), BS IV in India (since 2017) and Stage IV in China(since 2008). There are exceptions like India based Ashok Leyland`s iEGR technology which doesn’t require an SCR to meet the present emission norms.

COMMERCIAL VEHICLE SCR MARKET SEGMENTATION

By Sub-components

1. Urea(AdBlue)/DEF
2. Dosing system
3. Catalysts

By OEM

1. Daimler
2. Ford
3. Paccar
4. Navistar International
5. Volvo
6. Mitsubishi
7. Fiat Industrial
8. Indian OEMs(Tata Motors, Ashok Leyland, Mahindra, Eicher)
9. Chinese OEMs(Dongfeng, Sinotruck, CNHTC, etc)
10. Others(Hino, Scania, MAN etc)

By Geography

1. US
2. Europe
3. China
4. Japan
5. India
6. Canada
7. South Korea
8. ASEAN
9. Latin America
10. ROW

COMMERCIAL VEHICLE SCRMARKET DYNAMICS

In spite of all the fuss about Diesel being a dirty, polluting fuel and plans by many countries to ban Diesel powered vehicles, the reality is Diesel powered commercial vehicles will remain a preferred choice of fleet operators worldwide, at least till 2030.

The market for the SCR technology is expected to grow during the next 5 years as it is yet to reach a 100% penetration among the diesel engine powered Commercial Vehicles. SCR has witnessed a growth in adoption post-2010 in all regions including India, which is the third biggest commercial vehicle market globally.

The commercial vehicle SCR market could face growing competition from natural gas and electric powertrain. Almost all Class 8 trucks in North America run on Diesel but in 2014 it looked like there was going to be a shift towards Natural gas. Today, however with comparatively lower crude prices globally, it is pretty evident that cheap diesel will have a clean run at least till 2021-2022.

COVID-19 IMPACT ON COMMERCIAL VEHICLE SCR MARKET

The impact of the COVID-19 has been severe on the automobile industry as most of the automakers in various regions including Europe have halted sales and production activities. This pandemic has also forced several automakers to close their plants and has halted the supply chains in the automotive industry, severely impacting the selective catalytic reduction market growth.

Several auto manufacturers are engaged in research and development to advance SCR systems to enhance the fuel-efficiency of vehicles as the demand for fuel efficient vehicles is growing among the consumers, leading to rising market penetration of SCR systems. The trend of downsizing of engines will also help the market to gain traction in the forthcoming years, as smaller engines reduce the weight of the vehicle and thus make it more fuel-efficient. However, the higher cost associated with the selective catalytic reduction is expected to act as a major restraint for the market growth.

The Selective Catalytic Reduction (SCR) market has witnessed tremendous growth off late mainly due to the stringent government emission regulations and the favorable government policies across the globe trying to curb vehicle emission increased the demand for SCR systems. Another driving factor which gives an impetus to the demand for SCR system over LNT system is that there is a problem of clogging associated with the LNT system that results in the blockage of EGR (exhaust gas recirculation) valve.

Due to which, automakers cannot reduce the number of recirculation processes, which leads to an increase in temperature and rise in the rate of NOx particles exceeding the amount of NOx that the LNT system can handle. The alarming growth in health hazards caused due to vehicular emission have resulted in growing awareness among OEM’s and manufacturers to  contribute towards the growth of the selective catalytic reduction (scr) market. As the diesel engines contribute a major part of the vehicle emission, application of selective catalytic reduction in diesel vehicles will propel the growth of the commercial vehicle SCR market.

RECENT TRENDS IN THE COMMERCIAL VEHICLE SCR MARKET

Johnson Matthey announced partnership with Kebotix to enhance their digital strategy for the catalytic converter optimization project with the help of artificial intelligence. This collaboration will develop innovative methods to increase the efficiency of experiments leading to the optimisation of catalytic converter coating formulations.This project uses Kebotix’s ChemOSTM Pro technology for developing machine learning models via the company’s AI optimisation algorithms -August 2021

Faurecia revealed its innovations at the Shanghai Auto Show, designed for the needs of Chinese consumers to enable a safe, comfortable, and connected on-board experience. Faurecia also showcased its ultra-low emissions technologies and zero emission hydrogen solutions for passenger and commercial vehicle -April 2021

Durr Megtec introduced its new concept for air pollution control technologies under its Clean Technology Systems (CTS) division The different methods are now bundled into five product families, all with an “X” for excellence such as Oxi.X for oxidation technologies, Cat.X for catalytic air pollution control systems, Sorpt.X for sorptive methods, Part.X for particulate control technologies, and Service.X for global service activities over the entire life cycle of the air pollution control systems. This new concept is the next logical step in the company’s strong product portfolio expansion strategy, which included the acquisition of the environmental technology specialist Megtec -March 2021

Stellantis and Faurecia collaborated to equip its new zero-emission ranges of light commercial vehicles with hydrogen storage systems, as well as fuel cell stacks through Symbio, Faurecia’s joint venture with Michelin -March 2021

Faurecia announced its construction of a new industry 4.0 platform in the Bourgogne-Franche-Comte region of France for a total cost of €165 million, employing over 1,000 people in the long term. This new site will produce seats, innovative solutions for reducing vehicle emissions with catalytic reductions, and hydrogen storage systems with the latest digital manufacturing technologies -February 2021

JM expanded its fuel cell component manufacturing operations along with catalytic reducers in China to power the next wave of zero emission commercial  vehicles.These fuel cells components are a clean, zero emission alternative to internal combustion engines for mobility, especially for heavy duty vehicles -October 2020 

COMMERCIAL VEHICLE SCR MARKET SIZE AND FORECAST

In China, world`s biggest commercial vehicle market, new heavy duty truck sales in Jan-Oct 2019 have grown by 0.5% YOY to ~0.98M units.But, old Diesel vehicles face risk in substitution by electric trucks.

For example, By December 2019, more than 10,000 old diesel vehicles will be eliminated. All diesel buses in Jiangning District, Lishui District and Gaochun District will be phased out and upgraded to electric buses.

The national subsidy for replacing a diesel commercial vehicle with electric vehicle ranges between 4,000CNY to 40,000CNY($570-$5,700). The commercial vehicle SCR market is heavily dependent on replacement demand , therefore phase out of old commerical vehicles presents a big challenge to the market.

The commercial vehicle SCR market is estimated at $XXM in 2020 growing at –% CAGR till 2026.

COMPETITIVE LANDSCAPE

BASF SE reported a sales increase of € 9,720 million as compared with the first half of 2020 to € 39,153 million. This was primarily driven by higher prices, especially in the Surface Technologies, Chemicals and Materials segments, as well as by increased sales volumes in all segments. In the second quarter of 2021, the sales increased to € 7,073 million as compared with the second quarter of 2020. Sales in the Surface Technologies segment rose considerably due to the higher precious metal prices in the catalysts division.The sales growth was supported by increased volumes in nearly all business areas in both divisions, resulting mainly from greater demand from the automotive industry to manufacture catalytic reducers for light and medium commercial vehicles.

In the first quarter of 2021, Johnson Matthey Inc reported a strong sales growth of 3,923 EUR million, up 63% year-on-year which is primarily driven by increased demand in Clean Air and also Efficient Natural Resources which benefited from higher precious metal prices for manufacturing catalytic reducers. In the clean air segment including catalysts for light duty and heavy duty vehicles reported a sales of 2,412 EUR million and in the efficient natural resources segment including catalyst technologies reported a sales of 1,057 EUR million.In the hydrogen fuel cells segment, they continued to build their customer pipeline and recently signed a new agreement for the supply of membrane electrode assemblies (MEAs), mainly for commercial vehicles, with Unilia/REFIRE and for the supply of catalyst coated membranes (CCMs) for commercial vehicle and truck applications. 

Faurecia reported a strong performance in the first half of 2021 with a net sales of 7.8 EUR billion, up 27.9 % when compared to 6.08 EUR billion in the first half of 2020 despite the adverse impact from the shortage of semiconductors and raw material inflation. In the Clean Mobility segment, Faurecia totaled €2,040.0 million sales in the first half of 2021, up 23.9% when compared with the same period of the previous year. The sales in the products segment (parts, components and R&D sold to manufacturers) reached €7,278.2 million in the first half of 2021, up 30.6% when compared to €5,572.6 million in the first half of 2020.

Delphi Technologies reported a net sales of $ 1,487 million in the second quarter of 2021, up 47% when compared to $ 628 million in the second quarter of 2020. In the air management segment including catalytic reducers for commercial vehicles, sales rose significantly to $ 788 million in the second quarter of 2021 as compared with $150 million in the same period in 2020 as the demand for zero emission vehicles increased to reduce carbon footprint all around the world.

The commercial vehicle SCR market is concentrated among ~10-12 major vendors. The number of companies manufacturing complete SCR system is less than ten, but the number of sub-component manufacturers is more than twenty globally. The technology for manufacturing SCR catalysts is highly complex and thus very few companies are present in this market.

In coming years, we expect most of the SCR suppliers of passenger vehicles will shift focus to commercial vehicles only due to declining share of Diesel in passenger cars in Europe (<30% in H1 2019).

On the other hand, the commercial vehicle SCR suppliers will look to cater to marine and off-highway vehicles for additional business opportunities, due to growing SCR fitment in bigger, stationary engines globally.

COMPANIES PROFILED

1. Johnson Matthey Inc.
2. Faurecia S.A.
3. Cummins Inc.
4. Katcon Global
5. Tenneco Inc.
6. Delphi Technologies
7. Durr MEGTEC, LLC
8. DCL International Inc.
9. Yara International ASA
10. BASF SE
11. IBIDEN Technologies
12. Sud-Chemie India Pvt Limited

THIS REPORT WILL ANSWER FOLLOWING QUESTIONS

1. Total addressable market size of commercial vehicle SCR system, by OEM and geography, forecast till 2026
2. Average B-2-B price of SCR system and sub-components in commercial vehicle market, by region
3. Most important trends in new commercial vehicle development and the impact of electric commercial vehicles, by region on commercial vehicle SCR market
4. Technical changes in high volume platforms of commercial vehicle SCR system, related to dosing /injection mechanism and chemical catalysts
5. Market share of leading vendors, their new product strategy and OE-supplier alignment